Dominion Power 2001 Annual Report Download - page 88

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REPORT OF MANAGEMENT’S RESPONSIBILITIES
The management of Dominion Resources, Inc. is responsible
for all information and representations contained in the
Consolidated Financial Statements and other sections of the
annual report. The Consolidated Financial Statements, which
include amounts based on estimates and judgments of man-
agement, have been prepared in conformity with generally
accepted accounting principles. Other financial information
in the annual report is consistent with that in the Consolidated
Financial Statements.
Management maintains a system of internal accounting con-
trols designed to provide reasonable assurance, at a reasonable cost,
that Dominion’s and its subsidiaries’ assets are safeguarded against
loss from unauthorized use or disposition and that transactions are
executed and recorded in accordance with established procedures.
Management recognizes the inherent limitations of any system of
internal accounting control, and therefore cannot provide absolute
assurance that the objectives of the established internal accounting
controls will be met.
This system includes written policies, an organizational struc-
ture designed to ensure appropriate segregation of responsibilities,
careful selection and training of qualified personnel, and internal
audits. Management believes that during 2001 the system of inter-
nal control was adequate to accomplish the intended objectives.
The Consolidated Financial Statements have been audited
by Deloitte & Touche LLP, independent auditors, who were
designated by the Board. Their audits were conducted in accor-
dance with auditing standards generally accepted in the United
States of America and include a review of Dominion’s and its sub-
sidiaries’ accounting systems, procedures and internal controls, and
the performance of tests and other auditing procedures sufficient
to provide reasonable assurance that the Consolidated Financial
Statements are not materially misleading and do not contain
material errors.
The Audit Committee of the Board of Directors of Dominion
Resources, Inc., composed entirely of directors who are not officers
or employees of Dominion Resources, Inc. or its subsidiaries, meets
periodically with the independent auditors, the internal auditors
and management to discuss auditing, internal accounting control
and financial reporting matters of Dominion and to ensure that
each is properly discharging its responsibilities. Both independent
auditors and the internal auditors periodically meet alone with the
Audit Committee and have free access to the Committee at any time.
Management recognizes its responsibility for fostering a strong
ethical climate so that Dominion’s affairs are conducted according
to the highest standards of personal corporate conduct. This
responsibility is characterized and reflected in Dominion’s Code of
Ethics, which addresses potential conflicts of interest, compliance
with all domestic and foreign laws, the confidentiality of propri-
etary information, and full disclosure of public information.
Dominion Resources, Inc.
Thos. E. Capps Steven A. Rogers
Chairman, President and Vice President, Controller and
Chief Executive Officer Principal Accounting Officer
To the Shareholders and Board of Directors of
Dominion Resources, Inc.
Richmond, Virginia
We have audited the accompanying consolidated balance sheets
of Dominion Resources, Inc. and subsidiaries as of December
31, 2001 and 2000, and the related consolidated statements of
income, comprehensive income, common shareholders’ equity,
and cash flows for each of the three years in the period ended
December 31, 2001. These financial statements are the respon-
sibility of the Company’s management. Our responsibility is
to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing stan-
dards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements
present fairly, in all material respects, the financial position of
Dominion Resources, Inc. and subsidiaries as of December 31,
2001 and 2000, and the results of their operations and their cash
flows for each of the three years in the period ended December
31, 2001, in conformity with accounting principles generally
accepted in the United States of America.
As discussed in Note 15 to the consolidated financial state-
ments, effective January 1, 2001, the Company adopted State-
ment of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities, as amended. Also,
as discussed in Note 3 to the consolidated financial statements,
the Company changed its method of accounting used to develop
the market-related value of pension plan assets in 2000.
Richmond, Virginia
January 22, 2002
INDEPENDENT AUDITORS’ REPORT